Police and protesters clashed in Athens for a second day Wednesday as the nation’s lawmakers debated legislation needed to pave the way for billions of dollars in international emergency loans to help keep the country solvent.
A vote is expected later on Wednesday, and Greek officials said they were confident the legislation would pass, despite a two-day nationwide strike and continued violent demonstrations. Markets also anticipated a positive vote: Major European exchanges were up between 1 1 / 2 and 2 percent.
The vote, on a $40 billion package of tax increases and spending cuts, is a critical step in crisis talks between Greece’s political leaders, European officials and the International Monetary Fund over how to stabilize the country’s finances. Unless the measures are approved, European leaders and the IMF say they will not release $17 billion in emergency loans scheduled for Greece under a rescue program negotiated last year.
Without that money, the country may not be able to pay its bills, including billions of dollars due to bondholders in coming weeks. The prospect of a Greek default has kept markets on edge for weeks and been cited by the IMF and the Obama administration as one of the chief risks to the world economy.
The austerity measures proposed by Prime Minister George Papandreou — including taxes on lower income wage earners and a nationwide emergency levy — have sparked outrage among a populace living through a third year of recession. Wednesday’s vote will be followed by another key parliamentary session on Thursday, when further legislation will lay out in detail how a series of economic policy and other changes will be implemented.
Papandreou’s governing Panhellenic Socialist Movement (PASOK) holds a slim majority, with 155 seats in Greece’s 300-member legislative body. He survived a vote of no confidence last week, a positive sign that his colleagues would back him despite the unpopularity of the austerity measures among unions, public sector employees and other party faithful.
Read more at The Washington Post.